The objects for which an investment co-operative society is established…..

a) To invest members’ contributions in prudently identified ventures in order to maximize the return on their investment.

MONEYb) To acquire, lease, or otherwise dispose of the society’s building(s) and other fixed properties as necessary.

c) To purchase, take on lease or exchange, hire or otherwise acquire any movable or immovable property of any kind of any interest therein any right or privileges which the management committee of the society may think necessary or convenient for the purpose of or in connection with Society’s business or which may enhance the value of any other property of the society.

d) To improve, manage, develop, and turn to account, grant rights or privileges in respect of or otherwise deal with any of the property, rights and privileges of the society.

e) To acquire and undertake the whole of any part of the business, assets and liabilities of any person or Society carrying on or proposing to carry on any business which the society is authorized to carry on or which can be carried on in conjunction with any business of the Society or which is possessed of property suitable for the purpose of the Society.

f)  To pay out the funds of the society, all expenses which the society may lawfully pay for or in connection with the formation and registration of the society.

g) To amalgamate, enter into partnership or into any arrangement for sharing profits, union of interests, co-operation, joint ventures, reciprocal concession, limiting competition or otherwise, with any person of society carrying on or engage in or can be carried on in conjunction with any business of the society or which is capable of being conducted so as to benefit the society, directly or indirectly.

h) To borrow money or receive money or deposit either with or without security or secured by debentures, mortgages or other security charged on the undertaking or on all or any of the assets of the society.

i) To subscribe for, underwriter, buy, hold, sell and deal (either on or off a stock exchange, and either as principles, agents or trustees) in every description, to advice on investment of all kinds, to advice on, assist and deal with issues, offers for sale, and generally to carry on the business of stock and share brokers.

j) To remunerate any person or company either in cash or by allotment of shares credited as fully or partly paid up, for services rendered or to be rendered in placing or assisting to place or guaranteeing the placing of any of the shares in the Society’s capital of any debentures, debentures stock or other securities of the society or in or about the formation or promotion of the society of the conduct or development of its business and to pay out of the funds of the society all expenses and incidentals to its formation and registration.

For the attainment of the above objects, the society may do acts and things that are permissible under the Act, rules and these By- laws including but not limited to power to purchase, hold, sell exchange, mortgage, rent, lease, sub-lease, surrender and accept surrender of land or buildings and construct buildings and doing all such other things as are incidental or consequential to the economic enhancement of its members interests provided such act is approved by the members in a general meeting.




Investment by SACCO Societies

The core business of a SACCO society is to receive savings contributions from members and to provide them with credit facilities.  This is in form of revolving fund from the members’ savings. The law does not encourage co-operative societies to invest funds in non-core business.

If money don't grow on trees, why do banks then have branches? :-)

If money doesn’t grow on trees, why do banks have branches? 🙂

The first investment that a SACCO Society should invest its funds in is in its members in the form of loans.  Here, the society can introduce as many loan products as is practicable.  Members should be able to apply and utilize as many loan products as they may qualify for.  This should be subject to the regulations in place for loans in general, and for each loan products.

When the members’ loan demand has been fully met and there are no pending loan applications due to inadequate funds for lending, the society can invest any surplus funds in financial instruments. this is because the funds can be recalled within short notice when the need arises.

The probable areas that SACCO Societies can invest surplus funds in include; purchase of shares in companies and other institutions, investing in Government treasury bills, putting money in fixed deposit accounts. Surplus funds should first be determined and should be invested in institutional funds or other SACCO.

Before the officials decide to invest any surplus funds and where, they should properly analyze the funds position and ensure the excess liquidity is not temporary and that the core business will not be affected.

Any investment of society funds outside the core business should be able to conform with and promote the basic goals and objectives of the society.  the society should be able to get maximum return on the investment for the benefit of the members.

For SACCO Societies that qualify and are able to open and operate Front office Service Activity (FOSA), surplus funds can be invested in that activity and be utilized by members through various products that may not be offered through the back office.  Such products include short term loans and advances and loan clearing for the back office.  These products have become very popular with members and are a good source of income for SACCO Societies.

Where a society wants to invest in a building for own accommodation, or enter into long term investment, then it should use institutional capital and not members funds.   Where a society invests in real estate other than for its own accommodation, it shall not hold more than 20% of the equity in the investment.  It should also not expend a sum exceeding 25% of its share capital in such venture.

SACCO Societies should not enter into the business of acquiring land or buildings for members. Members can form separate housing co-operatives for such activities.   Members should also be sensitized and encouraged to get individual loans from their societies and join with like minded friends to acquire property.  they can later decide on what to do with the property jointly acquired.

Any involvement in non-core business should get the approval of the Commissioner and general meeting through a special resolution.

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